Research published today (Wednesday 12 March 2014) has found that employee-owned firms in Scotland perform well in relation to conventionally structured businesses on a number of variables, including employment, sales and productivity.

The research was undertaken by a team of researchers from three Scottish universities: The University of St Andrews, Edinburgh Napier and Stirling.

In recent years there has been considerable growth in the number of employee-owned firms in Scotland. There are now around 45 employee-owned firms headquartered in Scotland which together employ around 2,500 workers. The vast majority of these firms are small and medium-sized enterprises (SMEs). Recent examples of firms becoming employee-owned include AquaScot, Clansmen Dynamics, Voice Technologies and Woollard & Henry.

The UK and Scottish governments have strongly backed the view that employee-owned businesses are an effective mode of corporate governance to achieve business growth. Indeed, members of the UK government have been frequently extolling the virtues of the so-called ’John Lewis economy’. Therefore, the study has important policy implications.

The study examined the growth performance of Scotland’s employee-owned firms and compared this with non-employee owned firms. The study marks the first time Scotland’s employee-owned firms have been examined in-depth by academic researchers.

Commenting on the findings the lead author of the paper Dr Ross Brown from the University of St Andrews claimed:

“The John Lewis economy is alive and well in Scotland. However, it appears that it is small dynamic SMEs who are most eagerly embracing the employee-ownership model in Scotland.”

Dr Brown further noted that contrary to the popular belief:

“Scots employees appear to be very successful capitalists and employee involvement seems a very good recipe for the success of these businesses.”

One of the study’s authors Professor Robert Raeside from Edinburgh Napier University said:

“The performance of Scottish employee owned businesses is generally superior to their counterparts on a number of different variables. In terms of their employment and sales growth employee owned firms do better than non-employee owned firms.”

Another of the reports co-authors, Professor Ronald McQuaid from the University of Stirling, said:

“These finding largely mirror other research undertaken elsewhere in the UK and abroad and further strengthens the evidence base concerning the growth performance of employee-owned firms.”

Professor McQuaid claimed the findings suggest that “support for fast growing employee-ownership firms is likely to lead to benefits throughout the Scottish business community.”

Scotland has around a third of the entire UK total number of employee-owned firms. However, the levels of employment in Scotland are less significant that the UK as a whole owing to the impact of large employee-owned firms such as John Lewis Partnership.

For further information contact Dr Ross Brown from the School of Management, University of St Andrews, by email: Ross.Brown@st-andrews.ac.uk or phone: 07947 190175